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Vancouver-based Nevsun Resources Ltd. joined an interesting club last month when three plaintiffs said they are suing the company in a B.C. trial court, alleging forced labour and other human rights violations at the company’s Bisha gold mine in Eritrea.
Nevsun, which describes the allegations as unfounded, is the latest Canadian parent company to be sued over the alleged actions of a foreign subsidiary or contractor. Vancouver-based Tahoe Resources Inc. was named in a suit last June over an incident at the company’s mine in Guatemala.
Then there’s Toronto-based Hudbay Minerals Inc., which has been sued in Ontario allegations that security personal assaulted women at its mine in Guatemala.
It was once believed that as separate legal entities, a Canadian parent company was distinct and therefore legally immune from the actions of its foreign subsidiary or contractors. Or so goes the legal reasoning if you believe the “corporate veil” insulates the parent from any liabilities that attach to its subsidiaries abroad. But plaintiff lawyers have developed a work around that appears to be putting Canadian parent companies on the hot seat. Lawyers expect more such cases.
“This is on the horizon more than ever. Companies traditionally think they were protected from these types of actions because of the corporate veil,” says Luis Sarabia, a partner with Davies Ward Phillips & Vineberg LLP in Toronto. “Mining companies are just coming alive to this being a real risk.”
The law hasn’t gone through a dramatic change. Rather, lawyers are skirting around the corporate veil issue by pointing to public statements that Canadian parent companies have made about their commitments to corporate social responsibility.
They’re then suing the Canadian parents for negligence and other traditional torts on the grounds that management hasn’t lived up to the standards outlined in their public pronouncements.
For the rest of this article, click here: http://business.financialpost.com/2014/12/10/canadian-mining-companies-face-lawsuits-over-foreign-activities/